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Copy Trading vs Mirror Trading – Which Is Right For You?

If you’re thinking about beginning online trading, you may be wondering which type of trading is right for you. In this article, we’ll discuss copy trading vs mirror trading, including the pros and cons of each method of trading, so that you can make an informed decision about the right type of trading for you.

Is Online Trading Really Safe?

Like any form of trading, online trading can have its risks. Sometimes you’ll make gains whilst other times you may make losses. The most important thing to do is to make an educated decision about the type of trading that you do and the platform that you choose to use.

Read on to find out more about mirror trading and copy trading and which type of online trading is right for you.

Learn about the top 3 rated copy trading services here

What Is Mirror Trading?

Mirror trading involves mirroring the trading strategy of other traders exactly, in almost real time. Mirror trading platforms combine the strategies of their top traders to create an algorithm which sends a signal which your trades will be based upon.

With mirror trading, you have to mirror everything. There’s no way of picking and choosing which signals you want to follow as the whole process is automated.

When you decide to trade with mirror trading, you’ll need to invest a large amount of capital from the start. This is because there can be high levels of fluctuation in your account due to the large volume of trades being completed. You’ll need to keep a close eye on your account to make sure that you have sufficient funds available and that nothing is going wrong.

What Are The Pros And Cons Of Mirror Trading?

Here are some of the pros and cons of mirror trading, to help you to understand whether this is the right type of trading for you.

Pros Of Mirror Trading

  • Low level of time commitment required due to the automated nature of mirror trading.
  • No emotion involved – there’s no risk of making rash decisions that you later regret.
  • Combined trader algorithms mean that trading decisions are based on multiple traders, potentially lowering risk.

Cons Of Mirror Trading

  • Every trading action has to be mirrored – you can’t pick and choose.
  • Trading algorithms are typically unpublished so the logic is largely unknown.
  • Large initial investment required.
  • May result in large fluctuations in your account.
  • There are many scam platforms around so it can be hard to know which mirror trading platform to choose.
  • Technical knowledge is required to understand how algorithms work.
  • Some algorithms are more proven than others and a newer algorithm may not perform as well as a proven algorithm.
copy trading and mirror trading image of coins

What Is Copy Trading?

Copy trading is similar to mirror trading, in that you mimic trading actions. However, unlike mirror trading, copy trading allows you to choose the specific trader whose trading actions you want to copy. This can be done either automatically using an automated trade bot, using a signal service or through a service that manages investments and returns.

You can choose to follow different traders at different times, follow multiple traders or to stick with the same trader consistently. By following established traders, you can learn about their trading strategies and begin to understand the reasoning behind their trades.

What Are The Pros And Cons Of Copy Trading?

Here are some of the pros and cons of copy trading, to help you to understand whether this is the right type of trading for you.

Pros Of Copy Trading

  • You can pick and choose which individual traders you want to follow, giving you more control of your trades and allowing you to research their trading history and success rates.
  • Copy trading has a low time commitment as you can choose to automatically follow the trading actions of your chosen trader.
  • You don’t need to spend time watching graphs or researching trading.
  • You’ll be following a smaller number of traders than in mirror trading, allowing you to stay ahead of your account activity.

Cons Of Copy Trading

  • Copy trading is not risk free – if the trader that you’re following makes a bad trade, you will also be affected.
  • Not all copy trading platforms can be trusted – there are a lot of scams around.

Click here to find the top 3 rated copy trading services

Which Should You Choose – Copy Trading Or Mirror Trading?

It can be difficult to know which type of trading is best for you, even after reading the pros and cons of copy trading and mirror trading. Ultimately, it’s a personal choice that you’ll need to make based on your personal circumstances and goals.

Many people find that copy trading is the simpler and more flexible way to trade, offering higher levels of control over your investments whilst also giving you the freedom to relax without studying graphs.

Copy Trading Is Best For…

  • New traders who are looking to build experience with lower risk.
  • Those who often make poor trading decisions based on their emotions or FOMO.
  • Traders who don’t have the time to commit to studying graphs and following market trends.
  • Those who are looking for a hands-off approach to trading.

Mirror Trading Is Best For…

  • Traders who are technically-inclined and understand how trading algorithms work.
  • Those who often make poor trading decisions based on their emotions or FOMO.
  • Traders who have a high level of capital for an initial investment.  

Discover the top 3 rated copy trading services here

image showing graphs related to copy trading or mirror trading

Related Questions

How Much Money Can You Make From Copy Trading?

How much money you can make from copy trading will depend on how much you invest and the service that you choose to use. Like any form of trading, profits are not guaranteed and you may make a loss. However, choose the right platform and you’ll have a good chance of making profits each month.

For example, crypto currency service Yieldnodes offers an average return rate of 10% each month. With compounding, a £1,000 investment could turn into £3,138 after a year. However, it’s important to remember that this is just an illustration based on past performance – your actual returns will be different due to fluctuating rates, meaning that there is no guarantee of future performance.

Is Copy Trading Worth It?

Copy trading can be a good way to build experience in trading with lower levels of risk than traditional trading. You don’t need experience in trading or to spend your days studying graphs. This is why many people rely on copy trading to build their investment portfolio. However, it’s important to remember that like any type of trading, profits are not guaranteed and you may make a loss.

In Summary

Copy trading offers a simpler and more flexible alternative to mirror trading, allowing investors the freedom to pick and choose which traders they copy, without the need to study graphs and follow market trends.

If you’re thinking about giving copy trading a go, my guide to the top 3 rated services is a great place to start. Here, you’ll find everything you need to know about the best copy trading services and how you can get started with your copy trading journey.

Click here to discover the top 3 rated copy trading services.

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